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About
Chapman, Spira & Carson, LLC
The Principals of Chapman,
Spira & Carson (CSC) have worked as a group on Wall Street for over 150
years. Among the firm's associates, they have owned five seats on the New
York Stock Exchange (NYSE) and have been members of all major American
Exchanges. Associates have served in various capacities in all facets of the
investment banking community; they have been affiliated with the American
Stock Exchange (ASE), The National Association of Security Dealers (NASD),
the Boston Stock Exchange, the District Business Conduct Committee of the
NASD, The Wall Street Planning Group, The Arbitration departments of both
the NASD and ASE, as well as the New Products Committee of the NYSE and the
ASE. One of our principals was a founding member of the American Commodities
Exchange and the New York Futures Exchange. From time to time, the firm has
also proposed unique security regulatory modifications to the investment
banking industry, many of which have been adopted.
Members of the firm have
acted as advisors to various Congressional Committees regarding securities
matters. Frequent white papers have been authored by the firm regarding
solutions and potential pitfalls that are relative to intricate security
regulatory problems, at the request of Congress. In the past, members of the
firm have hosted the various regulators from emerging Pacific Rim Countries
in advising and initiating training programs: security enforcement
procedures, back-office operations, clearing procedures and transaction
executions. Our associates have written and published articles and books on
highly technical strategies in software, computers, economics and social
history.
CSC has acted as
consultants for the United Nations in the areas of technology and complex
economics. We have hosted seminars in which Commissioners of the Securities
and Exchange Commission, the U.S. Attorney, the Congressional author of
ERISA, U.S. Senators and other equally prominent legislators and regulators
have spoken. Many of these events we have held at the New York Stock
Exchange. Our people have also given seminars for the Wall Street Community
on NYSE regulations, 390 and 394, negotiated rates, best markets and soft
dollar payments. Prominent among those that have participated in our forums have been senior officials at
some of the world’s largest banks, brokerage houses, exchange officials,
specialist firms and regulators.
The firm is especially
proficient in identifying the relationship between proposed additional
regulations that insure transparency and the ultimate cost effectiveness of
this action relative to business profitability. Moreover, we have been vocal
in enumerate potential changes relative to Generally Accepted Accounting
Principals (GAAP), concerning issues related to off-balance-sheet
transactions. To benefit as they relate to GAAP accounting issues, Sarbanes
Oxley enforcement issues as well as the dramatic changes taking place within
the marketplace itself as the inevitable shift to electronic order entry and
execution irreversibly accelerates its march forward. The firm has also
worked on numerous occasions to interpret the effect of regulatory rule
changes regarding such esoteric interests such as short selling, margin
rates and stock loans.
Numerous books and articles have also been produced
by the firm, which are meant to evaluate second and third world risks for
our corporate clients who are evaluating international expansion
opportunities. We have included almost forty country evaluations in our
Point of View section. These country evaluations
are a no holds barred appraisal from both a regulatory and taxation point of
view, along with sophisticated evaluations of relative government stability,
intellectual property rights, debt to gross national product ratios and wage
sensitivity. We also look at the educate-ability quotient of the population
as well as the government’s ability and desire to create a multi-national
friendly environment. Undesirable factors such as massive inflation,
unbalanced import-export duties and the ability of internal products to be
marketed to local markets are also issues that the country may fit into the
transfer pricing daisy chain.
On Wall
Street we all deal in resumes' describing our various firm's strong points.
Have you ever heard of a firm that gave their weak points as well and we are
certainly not going start now. However, Wall Street is great at giving
advice and not so hot on taking it. As a percentage, broker-dealers probably
have a shorter life expectancy that any other business. Since 1950, at the
end of every decade only 20% of the brokerage firms had survived bearing the
same name. We have never learned how to either prepare for the future or
deal with the past. A former Chairman of the New York Stock Exchange served
substantial time for fraud, Merrill Lynch and other were involved in highly
unusual transactions with Enron and if the firm had been smaller, it would
have closed. On this street, bigness represents survivability. During the
1980's and 90's many small broker dealers were taken over by either the
Italian or Russian Mafia and there was little that the National Association
of Security Dealers could do about it. What you see here is not necessarily
what you get.
One of
Wall Street's great stories in that regard concerns the famous George Soros,
the founder of Quantum Fund, and his wizardry in calling the shots in the
global marketplace. George has a son named Robert who actually told it the
way it was. "My father will sit down and give you theories to explain why he
does this or that. But I remember seeing it as a kid and thinking, Jesus
Christ, at least half of this is bullshit. I mean, you know the reason he
changes his position on the market or whatever is only because his back
starts killing him. It has nothing to do with reason. He literally goes into
a spasm, and it's this early warning sign." How many of us were ever aware
that international markets may rise or fall depending upon George Soros'
back ailments.
Our
Philosophy for whatever its worth
One of the
most important things to stay clear of are any potential conflicts that
could result in litigation. Corporate lawsuits are very expensive and
ultimately the only winners are the lawyers. Protecting Intellectual
Property is rated as the most expensive litigation that is currently heard
in this country. But following closely are the regulatory problems that even
innocent employers can be hit with. Sexual discrimination and age
discrimination are particularly difficult areas to deal with especially for
smaller companies. While we don't have a magic bullet the will solve any of
these problems, one of our affiliates has created a model that could be very
useful if followed very carefully. However, the best advise may be that of
having an excellent reason for your decisions and be consistent. The
following story is one that we use to illustrate the litigious nature of our
system and this one didn't even happen in the United States.
It seems
that MGM was concerned that in their upcoming production of Rasputin and the
Empress, there was a character named Prince Yusupov who happened to be a
real person and very much alive. Due to the fact that MGM was going to
fictionalize certain elements of the movie the lawyers thought it best to
make up another name for the character that would be harmless. They chose
"Prince Chegodieff." (Obviously no one had a name like that). However, the
real Yusupov found the movie too transparent and in his lawsuit claimed that
anyone with half a brain would know that in spit of the name change the
foolish character was indeed the real Yusupov. The London Court where the
matter was heard agreed the the name change was transparent and Yusupov
collected a substantial sum from the dazed MGM. However, their misery had
only started, it seems that there was also a real Prince Chegodieff who was
not at all happy by being made to look like a clown on the big screen and he
filled his own action. MGM lost again and the litigation removed any chance
of the film Rasputin and the Empress ever had of making money. I think that
if this happened to me, I would have sulked for a year or two before
venturing into the daylight again.
In the area of Mergers and
Acquisitions, our staff has developed sophisticated mathematical models that
are capable of evaluating the strategic benefits of various acquisitions. We
also make recommendations based on relative merit and synergistic
considerations, such as synergistic intellectual property portfolios that
would fill in gaps in the technology, an exchange listing facilitating
accelerated access to financing, or a tax loss carry-forward which would be
usable by the surviving entity. Probably the worst reason in the world for
companies to merge is because something is hot at the moment and looks like
it will never stop. The truth is that every fad has its day and until it is
tested by time, you can never be certain as to how it will turn out. This is
especially true if you are reaching to make it work. Obviously, there are numerous additional
issues that must be vigilantly explored, but we believe that the above are
some of the more critical. However, we would like to illustrate our point
with what is a relatively well known financial disaster.
As you are
aware, everyone that knew anything said the tech bubble was never going to
stop in 2001. The internet boom was exploding and everyone just had to get a
piece of the action. Somehow, the "white shoe" Time Warner crowd got
involved with Steve Case the aggressive fearless leader at AOL. At the time,
AOL was the leading purveyor of net services and thought they they could
move proprietary items such as magazines and movies as well. The people at
Time Warner were concerned that the boat was leaving and they were not
onboard yet. Thus, a marriage thought to be made in heaven was consummated
that almost wiped out everyone concerned. Things became so bad after the
merger was accomplished that the "Time employees would no longer have free
soft drinks and Sports Illustrated staff would be limited to nine pizzas on
issue-closing nights.
Time
Warner's cartoon division was so upset by the culture clash that they
refused to license the name "Road Runner" to the company's high-speed cable
internet service for more than a year. AOL was assigned to build websites
for the Time Warner Units and this took years to consummate. Time Warner
management indicated to their stock holders that its securities would now be
treated as an Internet Company however, shortly thereafter, the Internet
stocks collapsed and Time Warner collapsed with them. Within a year of the
time the deal was announced, Time Warner stock had plummeted to less than
one-third of its value. Today ten-years later they are making a tad of
comeback but regulatory issues still haunt the company. If Time Warner had
checked out Case's resume' they would have found out that while at Proctor
and Gamble he had invented a moist napkin with built in hair conditioner
which almost sank their hair products division.
We are
also highly involved in assisting a few of our clients in the the marketing
of their products. While for the most part, senior management does not have
the time to take cold call from purveyors touting new products, when a well
known Investment Banker calls it is an entirely different kettle of fish.
companies are always concerned about their next round of financing or a
possible acquisition that they can make. Due to the fact that management is
not sure what to expect that do not want to take the chance that by not
taking the call, they will miss an opportunity. While we do not advertise
ourselves as marketing folks and while it is rare when we offer to assist in
this, but if we see something particularly dynamic that cries out for
marketing help, we really have contacts in the right places. Recently we
have been successfully working on several new iterations of software, one of
which seems to cover all of the corporate bases relative to regulatory
requirement filings such as Sarbanes Oxley and the other is program that
appears to answer most of the remaining security issues for the net.
However,
we are also smart enough to realize that you never want to be playing in the
other guy's game. The example that I think about whenever we travel a tad
outside our chosen business is the one about Ernest Hemingway's three sons,
John, Patrick and Gregory who apparently were best suited to staying at home
and collecting royalties on dad's work. In spite of not being the world
class businessmen, they formed a company called Hemingway Ltd that would
allow endorsements using Ernest's name. I have often wondered how dead
people are able to give endorsements for anything but I guess certain of us
are more gifted than others. Meanwhile the first license they issued was to
a Shotgun maker who promptly named his elegant new double-barreled 12-Gauge
shotgun, the Hemingway. However, shortly after the advertising campaign
began it was pointed out that Hemingway had blown his brains out with a
similar weapon. This of course caused some substantial consternation
among the public, the manufacturer and the gun dealers.
The
Hemingway brothers protested publicly that, "Dad really loved this sort of
gun." making matters infinitely worse. However, the diligent trio was not
willing to give up their dad's ghost just yet, for their encore they
plastered their Dad's name on a mega-priced limited edition Mont Blanc
fountain pen that could probably only be afforded by a few people on earth
and launched a massive advertising campaign only to be reminded just as the
release date arrived that "Dad never wrote with a pen in his life, only with
a pencil that had a sturdy eraser." Another deal had bitten the dust. As we
said, whatever your name, don't think you can cavalierly play in the other
fellow's sandbox. We try only to do these things with a touch of panache.
Another
base which we feel is more adequately covered by the firms relationships is
that of public relations. Public relations means various things to different
people but it is essentially the promotion of goods, services or a corporate
logo. Goods may be something as far unique as the price of the company's
stock price, raising money, promoting a new product or whatever public
companies do for a living. Chapman is a member of several of the most
prestigious analyst societies where clients are able to inter-phase with
Wall Street analysts, money managers, columnists and brokers. These forums
are virtually unknown to those not in the business but they are valuable
accoutrements to what we are able to accomplish. Moreover, through the years
we have met a substantial cross section of firms that make a living
glorifying their clients, or in other terms making them look better than
they really are. If this is done in a conservative manner observing all of
the regulations, it is part of entire fund raising picture. Public relations
are a powerful tool and can sometimes be used to bend the truth just a tad.
George
Plimpton was certainly one of the most interesting people one earth. He
would try anything and participated in almost every professional sport while
writing articles for the newspapers and magazine. Plimpton had a
particularly great sense of humor as did the Harvard Crimson, Harvard's
standard bearing magazine. At the 2001 Yale-Harvard annual competition in
2001 he was asked about what happened between the competitors in 1968. His
reply was certain interesting from his Harvard point of view. "Absolutely,
he said, Saw Harvard wipe out a 16 point deficit in 42 seconds and end a 16
- game Yale winning streak. Harvard Crimson's famous headline: "Harvard
Beats Yale, 29 - 29" I guess this proves that if you can't beat em - join
em.
We are
also pretty good at creating business plans that work. While this is not a
particularly productive field for us from an economic point of view,
business plans have substantial learning values in their creation and
the exhilaration of turning out a good one is sensational. In the process of
analyzing the direction a new concept should follow we tend to explore all
of the nooks and crannies that lead us from here to there. We have found by
delving into these often uncharted waters, keeps us a step ahead. When you
have finished the writing of one of these monsters, you sort of are able to
walk on water for a day or so because you have just given yourself a PhD
degree in a new discipline. Incidentally, we believe that it takes every bit
as much effort write one of these as it does to write a doctorial thesis and
in this case you are writing something where someone is betting the house on
the results, not philosophizing about the meaning of life.
A business
plan is like a new baby to the author. His plan is the greatest thing since
sliced bread and in many respects it is. Business plans are living and
breathing documents and if they are not, you have failed in communication
your concept. You must live your business plan as did Leslie Wexner who
built Victoria's Secret, Express, The Limited and Bath and Body Works. While
there are some connections within the framework of these entities, Mr.
Wexner is the only entrepreneur that has been successful at the are of
creation over and over and over again. Others are able to invest with aplomb
but creativity is something apart. The basis for Mr. Wexner's success was
twofold, a very active imagination and $5,000 his grandmother gave him to
start the business. Meanwhile the question still exists, what set Wexner
apart from others. He put the answer into context with one sentence, "I
asked every woman that I dated about her taste in lingerie. What did she
like and what would she like." this was the start of an empire and he was
only catering to what women wanted in the first place and were not about to
tell anyone.
CSC was formed in 1989 by
members of the Wall Street Community who had given numerous years of service
to the financial community. The firm’s model consisted of a commitment to
integrity, hard work and a more than sincere effort to get the job done for
our clients in an efficient and cost-effective manner. If the firm, after
evaluating the scope of a project, believes that it may not be able to
consummate the client’s goals, the firm will either recommend another firm
that we believe could be more effective, or drop out. There is nothing the
sullies a firm’s reputation more than unhappy clientele. CSC is convinced
that they are in a position to quickly and intelligently evaluate products
and their potential. If we believe something won’t fly for any reason, we
are committed to convey that information to the client, rather than pursue
windmills on their behalf. We are capable of analyzing highly complex
concepts and developing a procedural proposal relative to accomplishing the
company’s goals. This is our commitment.
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